In the opening 10 minutes of Roman Polanski’s Academy Award-winning film “Chinatown,” Jack Nicholson’s character J.J. Gittes finds himself in a meeting regarding water.

One man boasts that a reservoir is needed, that a dam must be built, and the price of $8.5 million is more than fair. This view is countered by that of Hollis Mulray, the chief engineer for the Los Angeles Department of Water and Power, who ends his speech saying, “I won’t build it. It’s that simple.”

This is what Pagosa Area Water and Sanitation director Glenn Walsh likened the PAWSD and San Juan Water Conservancy District’s joint meeting to: “I’m reminded of ‘Chinatown,’” Walsh said.

The comparison is easy to make: a drought-prone land, the need for water, and two vying entities, one for a dam being built and one against.

In this case, the dam would be built to create Dry Gulch Reservoir.

The Pagosa Area Water and Sanitation District has stepped back from this project, closed out its loan and has no interest in actively pursuing the construction of this reservoir.

The San Juan Water Conservancy District, on the other hand, wants to the reservoir to be built and is willing to pursue it (see related story).

This was the reason for last Thursday’s joint work session between these two entities. How can SJWCD pursue this expensive and work-intensive project while PAWSD walks away?

“We think of this as a $9 million hole and we’d like to help you take this off our hands,” PAWSD board chair Allan Bunch said. Last week, PAWSD board voted to close out its CWCB loan at $9.2 million.

“The board is very conservative. Our goal is not to impact the rate and taxpayers with one nickel more,” Bunch said.

SJWCD has expressed the desire to create a marketing plan for Dry Gulch Reservoir, knowing that in order to proceed and build a reservoir, a business partner is needed to fund the construction. Currently, what PAWSD and SJWCD own, at 90 and 10 percent ownership respectively, is 621 acres of the Weber property. This property alone is not sufficient to build a dam of 11,000 acre feet; a portion of the adjacent Laverty property is needed, but the number of acres necessary is still not known.

SJWCD board chair Rodney Proffitt explained that since a portion of the Laverty property is needed to build any size reservoir, and a straight trade with the Laverty family might not work, perhaps a three-way trade between PAWSD and SJWCD, the U.S. Forest Service and the Laverty family might be doable.

The thought concerning a three-way deal, Proffitt explained, is that a water project is much more marketable and makes the land profitable. Right now, proponents have nothing, except a ranch for which, perhaps, too much money was spent.

If the Ridge Property (the northwest portion of the proposed Dry Gulch site) were traded, a three-way deal brokered, and the Laverty property gained, there would be a reservoir site to market.

“You have the willingness of PAWSD to do what needs to be done with the Ridge property,” Bunch said. However, what can be done with the Ridge Property is minimal.

In the middle of this Ridge Property sits a gravel pit, which is still in operation. It could be in operation for the next 11 years. According to the Sand and Gravel Lease signed by SJWCD, PAWSD and the Weber family on Jan. 3, 2008, the land on which the sand and gravel operation is on, roughly 45 acres, is leased for a period of 15 years starting on the signature date. The Weber family pays $1 per year to rent this property.

PAWSD directors agreed they will not stand in the way of SJWCD moving forward with a project, but noted they will not be active participants.

“We still need to discuss what the marketing plan is going to be,” Bunch said continuing, “I’m going to venture to say that all the energy needs to come from the conservancy district.”

The meeting ended with Walsh asking the SJWCD directors a question, one that Bunch said they each needed to answer for themselves: “What is the purpose (of the marketing plan)? To get out of a loan or build a reservoir because you feel this reservoir is needed?”

No answers were given at the meeting.

One item was agreed upon at the meeting — concerning the Southwest Land Alliance. Jointly, PAWSD and SJWCD paid the SLA $25,000 and entered into a Conservation Easement Transaction Fee Agreement. The contract states, “the Water Districts and Laverty desire to share the burden of funding the costs of transactional due diligence, including but not limited to transactional work performed by SLA ... toward completion of the conservation easement donation.”

The transactional requirements are explained under the scope of work as, “submit an application for an open space (or other appropriate) grant to Great Outdoors Colorado (GOCO) in the grant round most timely to the conservation easement donation.” This part of the scope of work, the submission of a grant, was never completed. However, the argument on the side of SLA is that as the time to submit an application arrived, Dry Gulch had been dropped as an issue.

The second part of the scope of work holds the SLA responsible for creating a full Baseline Documentation Report.

SJWCD board member Windsor Chacey had sent a letter to Michael Whiting requesting an explanation of how the money had been spent, and received what the board dubbed an insufficient explanation.

Whiting provided a response in a letter to the editor in the Sept. 6 edition of The SUN.

“In fact, he more or less states that the baseline documentation has been complete,” Proffitt said, adding, “From my understanding, neither we nor PAWSD have a copy.”

Bunch suggested that the first step to be taken was for the SJWCD to ask for the baseline documentation. Then, if necessary, a joint letter could be sent asking for an accounting of what the SLA did with the money.

In an interview with SUN staff, Whiting said that the SLA had completed a baseline documentation report — several drafts, in fact. Both the SLA and the Laverty family have copies.